Hawaii auto sales downturn worsens

Total car registrations are expected to just top 57,000 this year

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The Hawaii automobile industry is braced for lower car sales this year, with vehicle registrations expected to drop 4.1 percent as the economy slows, according to the latest report by the Hawaii Automobile Dealers Association.

Total vehicle registrations are expected to barely exceed 57,000 due to extremely tight credit markets, rising unemployment, declining housing values, excessive consumer debt and high gas prices, the report said. The Hawaii Auto Outlook late last year forecasted a slightly lower 3.6 percent decrease in registrations for the year.

Meanwhile, vehicle registrations last year fell 11 percent to 59,861, a steeper drop than originally projected. Kauai posted the smallest decline last year -- 7.5 percent -- while the Big Island recorded the largest drop at 11.9 percent.

Hawaii vehicle registrations in 2008 are expected to fall 4.1 percent over last year, slightly worse than projected earlier, in the wake of the recent economic downturn, according to the latest report by the Hawaii Automobile Dealers Association.

Total vehicle registrations are expected to slightly exceed 57,000 due to extremely tight credit markets, rising unemployment, declining housing values, excessive consumer debt and high gas prices, the report said. In October, the Hawaii Auto Outlook was forecasting a 3.6 percent decrease in registrations in 2008.

"The market has now moved below its trend levels as economic events have taken a predictable toll on new vehicle sales," the latest report said.

Vehicle registrations last year fell 11 percent to 59,861, a steeper drop than originally projected. Kauai posted the smallest decline last year - 7.5 percent - while the Big Island recorded the largest drop at 11.9 percent.

However, the report noted that consumer affordability for new vehicles remains moderately good, while lower interest rates, aggressive pricing and gains in personal income should prevent a total market collapse.

The market is expected to recover by 2010, as consumers looking to replace aging vehicles boost new car sales and new high-technology products enter the market, the report said.

Mark Caliri, vice president and general manager of Mike McKenna's Windward Ford, said that consumers also look to trade in cars when they drop out of warranty so the pent-up demand should boost industry sales.

"We've been on a downward slide for the last couple of years, but for the last six months or so it seems to have leveled off," Caliri said. "We had such great years in 2003 to 2005 - those people are going to be ready to trade come 2008 to 2010."

Mike McKenna, chairman of the dealership, said that the industry has adjusted to economic downturns before. "We have to tighten up our belts, have to lay off people, have less inventory and have to adjust to what the economic things are. I just play it by ear."